sitting in for don lemon. 22 embassies are just hours away from closing their doors amid fears of a terror attack. >> there's very little doubt, if any, that something serious is being planned. it's a potential series of attacks. could be almost anyplace. >> we are taking it seriously, which i think you'd expect us to do. yeah, there is a significant threat stream and we're reacting to it. >> the embassies will be closed, and there's a travel alert for americans traveling abroad. there's some understanding of the seriousness of the threat. >> well, let's delve in these embassy closures a bit deeper. tom fuentes joins us. he's our law enforcement analyst and former assistant director of the fbi. tom, 22 embassies and consulates will be closed as of tomorrow. the u.s. government is announcing that. why not close them immediately? >> well, i think the reason was

because the threats that they intercepted were pretty date specific as to the end of ramadan, which is tomorrow, sunday. so i think that's why they didn't close them sooner, and actually in those countries the embassies would have already been closed on friday and saturday, the muslim holy days. so their weekends are basically friday and saturday. sunday is essentially the equivalent of monday in the west. it's the first day of the workweek. so closing them on sunday means closing them for the first day of the workweek, which coincides with the end of ramadan. >> and will they be closed for a protracted period of time? >> that we don't know. i think once you call on a threat, how do you call it off? so i don't know how long they'll keep them open or closed, i mean. or if they will add more embassies or reduce and just have a few closed. we don't know that yet. >> tom, the alert put out by the government cites what they call growing intelligence that al qaeda might be going operational

with plans for an attack. what could that growing intelligence actually be? >> well, it could be, again, the type of interceptions that they're getting, the type of human source information from our allies, from the authorities in yemen. as a matter of fact, where they believe these discussions are coming from now. so there's a variety of ways they could be gaining the information and hear an increase in the amount of information being discussed by the terrorists. >> and, tom, the people in those embassies and consulates, what would they be doing? >> good question. i'm sure they're being told to stay home and be safe and not be wandering around or going shopping or anything like that. but, again, these embassies are like fortresses so by having them closed the real security will be local host country and law enforcement in most cases. i think benghazi was a rare

circumstance because it was a small consulate in a remote area. >> al zawahiri posted a message calling on muslims to attack american interests. is this just coincidence? >> i don't think so. i think he's trying to, you know, essentially assume the mantle of bin laden and issue a periodic recorded statement encouraging his followers to commit attacks against the u.s. and u.s. interests. so i think in a way it's similar to what we've heard for many years starting with bin laden more than ten years ago. >> john fuentes, always good to talk to you. appreciate the incite. >> thank you, anna. shocking video that shows a close call for firefighters. a burning home in idaho collapsed while firefighters were battling the flames. no one was seriously hurt thanks to the fire captain. he realized the home was about

to collapse, radioed the firefighters, and ordered them to back away. several firefighters got hit with burning debris and some were knocked to the ground. only minor injuries for a few firefighters. the fire chief says training and experience saved the day. well, after testifying this week in a boston mobster's murder trial, a former fbi man is talking exclusively to us here at cnn. he spoke harshly about the man on trial and the fbi as well. also, cnn special report that the results of a year-long investigation, it's a look into shocking fraud and abuse involving a taxpayer funded rehab program. that's coming up. i'll take that malibu. yeah excuse me, the equinox in atlantis blue is mine! i was here first, it's mine. i called about that one, it's mine. mine! mine. it's mine. it's mine. mine. mine. mine. mine. it's mine! no it's not, it's mine! better get going, it's chevy model year-end event.

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former mobster whitey bulger says his trial is a sham. he got angry in court yesterday. he's charged in connection with 19 murders and in dramatic fashion, he waited until the final moments to announce a pivotal decision. deborah feyerick has the story. >> reporter: lawyers for james "whit "whitey" bulger waited until the last witness had testified before telling the court he would not take the stand. bulger addressed the judge saying it was a choice made involuntarily.

bulger appeared angry. he was shaking his finger at the judge and said he was, quote, choked off from making an adequate defense, and he said, quote, i didn't get a fair trial. this is a sham. do what you want with me. well, the wife of one of the murder victims shouted, you're a coward. patricia donahue's husband, an innocent truck driver, was killed in the cross fire of a murder bulger alleged l edly committed. >> i yelled out you're a coward because that's what he is. when you claim immunity -- when you believe that you have immunity and then you kill all these people and then you go to trial and you try to blame it on the justice department and then say, i didn't have a fair trial, well, get up there and tell us that. >> bulger's lawyer seemed to have two goals during their week-long defense. first, try to cast doubt on who killed two of the 19 victims, both of them women. second, shift the blame onto the fbi, specifically agents who either did nothing or did too little to prevent several murders. bulger's crime partner, steve

"the fi" "the rifle man" said he saw bulger kill the women. the girlfriend debbie davis was about to leave him for another man. a witness testified that phlegmy admitted he quote, accidentally strangled" the stunning 26-year-old. he acknowledged he lured her to a home but said bulger strangled her because she was talking too much and had become a liable. as for flemmy's common law stepdaughter, evidence was presented that flemmy had been sexual aabusing her for years. he always called her a prostitute doing drugs. he said he took her shopping before bringing her to a home where bulger was waiting. a number of fbi agents and supervisors also took the stand. several testified they believed bulger should be shut down as an informant because he wasn't providing useful information. they never pressed the issue

because fbi headquarters felt he was useful in taking down the mafia. defense lawyers spent weeks trying to refute the notion that he was an informant which raises the question what was bulger providing that would in his mind have given him immunity? closing arguments are set for monday. each side has three hours and then the fate of james "whitey" bulger will be decided. deborah feyerick, cnn, new york. coming up, a cnn exclusive on the whitey bulger trial. you will hear from a key witness. a former fbi agent who spent years trying to take down former mobster whitey bulger. stay tuned. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this cadillac srx for around $369 per month

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well, a cnn exclusive. the fbi agent who spent years trying to take down irish mobster whitey bulger is now talking to us at cnn. robert fitzpatrick testified

days ago in the trial about his efforts to get the fbi to stop using bulger as an informant. fitzpatrick described an fbi riddled with corruption. he also wrote a book called "betrayal: whitey bulger and the fbi agent who fought to bring him down." robert fitzpatrick joins us live from providence, rhode island. mr. fitzpatrick, good to have you with us. in a sense, the fbi is on trial. do you believe that the fbi let bulger get away with murder? >> well, they certainly helped him. they certainly were in his corner for a number of years, at least 25 years. they certainly protected him, and while he was committing murder, he felt protected. >> now, back in the day do you think that the fbi was any better than the irish mafia or

bulger's winter hill gang? >> well, the winter hill gang i think has been a little disseminated, and they're not as powerful as they were, but bulger's going away is not going to materially affect the irish gangs i don't believe. >> okay. do you think then that the fbi has cleaned up its act in recent years? >> well, they're trying to. they're trying to, but, remember, they still have elements of organized crime in the mafia, italian way, if you will, and we also have cultural crimes now which are different. hispanic and otherwise. so the nature of organized crime is really changing somewhat, and maybe the irish crime is not as important as perhaps it used to be. >> let me ask you this, the prosecution actually questioned your credibility, that you embellished the story so you could tell your book.

what's your take on that? >> well, it's what i told him. you know, first of all, i've been attacked by the doj, department of justice, and the fbi ever since i reported that bulger should be closed. in fact, my testimony wasn't that he was not in an informant. my testimony was that he should have been closed as an informant and never opened, in fact. and so all these years that was hanging over them if they're protecting him and i'm on the other side saying close him, that became a real problem. and so in court when i was testifying, i felt kind of threatened. i felt they were still threatening me. >> i think some people in the media felt that you were being bullied, but, mr. fitzpatrick, if you could just sit tight, we are going to bring in one of bulger's former associates. on this show he challenged bulger to take the stand.

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both sides have made their case in whitey bulger's murder trial. closing arguments are set for monday. the fbi agent who spent years trying to take down irish mobster whitey bulger is talking exclusively to cnn. robert fitzpatrick is back with me. he took the stand during bulger's trial. well, we're also joined by

ex-mobster john red shay, a former associate of whitey bulger. red, good to see you. you've called bulger a coward and a rat. were you surprised when bulger decided not to testify? >> no. as i said last week to don lemon, that he wasn't going to take the stand, and don't believe the hype from what his lawyers were saying because it was just manipulation on his part. >> why didn't you think he was going to take the stand? >> because they would have ate him alive if he got on the stand. mr. fitzpatrick -- fitzgerald understands about that. the government basically ate him alive. you know, you go on the stand, and you give these people a chance to attack you if you have any discrepancies in your story, it's going to come out. >> he called the trial a sham. wouldn't he want to set the

record straight? >> yes, exactly, but he didn't want to get beat up on the stand. that's what it came down to. >> red, let me ask you this, why do you think the fbi protected bulger for so many years? >> well, because he was giving them plenty of information. mr. fitzgerald knows that. he knows he had given plenty of information and helped set up italians with stevie flemmi. >> when you were with the fbi, was it considered glamorous for agents to work with mobsters? >> yeah. you know, overall we use informants like bulger, if you will, but you may know that i went out and interviewed him, and certainly he lied during the interview. i didn't trust him. and so as a former profiler for the bureau, i found out right away he should be closed.

he should not even be an informant and i reported that, and i did a memo. the memo went to the s.a.c., it was put in his safe. if you recall some of the testimony -- in fact, last week it was that they finally found, it was testified to, that that memo was actually destroyed about a little time back, which is news to me. >> certainly. can i just bring in red very quickly. let's talk about stephen who died suddenly before he could testify against bulger. police now say that the suspect's business partner allegedly poisoned him. do you believe that that suspect may have had links to bulger? >> no, not at all, none whatsoever. unfortunately for stephen, he was always in real estate deals that were a little shady and, unfortunately, it caught up to him. he caught up to a guy that was

going to -- felt as though he was being betrayed and he did something that was very stupid on his behalf. >> well, gentlemen, we will have to leave the conversation there. robert fitzpatrick and john "red" shea, we appreciate your time, thank you. >> thank you, anna. moving right along, after a year-long investigation, our cnn special report rehab racket is coming up. it's a look into fraud and abuse involving a taxpayer rehab program. what you're about to see will shock you. that is ahead. you like to keep your family healthy and fit. and now there's a new way to do the same for your dog. introducing new purina dog chow light & healthy. it's a no-sacrifices, calorie-light way to help keep him trim, with a deliciously tender and crunchy kibble blend he'll love. and 22% fewer calories than dog chow. discover the lighter side of strong. new purina dog chow light & healthy.

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welcome back. i'm anna coren. for the next 30 minutes we're about to bring you a special cnn investigation into a state-sponsored taxpayer funded

rehab program in california that gives an eye opening look at fraud and abuse. the program looks like a noble cause on paper. privately run rehab clinics get medicaid money. a year-long investigation by cnn and the center for investigative reporting has found a system riddled with fraud and poor oversight from billing for phony patients to allowing convicted felons to run rehab centers. because it's happening in california, it is big money. state and federal taxpayers are on the hook for tens of millions of dollars every single year. investigative correspondent drew griffin has this report. >> mr. aluno, drew griffin with cnn. george has run a taxpayer funded drug rehab business in southern california for the past six years, which is surprising because for the last 11 years he's been on a list of people banned from billing medicaid.

convicted of student loan fraud, george should never have been allowed to even open this clinic called gb medical. i'm asking you a few questions. you seem to be the center of fraud allegations. >> no. >> have you been faking signatures onto sheets of paper and billing the state for the money? guess what else? he is facing felony criminal charges for ripping off the state. allegedly getting paid by taxpayers to rehab drug abusers who weren't even there. excuse me, sir, how can you bill the state for clients that don't exist? just one second, sir. we never saw him again. his drug rehab business here in southern california has been part of the largest medicaid

program in the nation paid for with federal and state dollars. a one-year investigation by cnn and the center for investigative reporting found the rehab portion of that program called drug medi cal is rife with fraud, has operators who bill the government for made-up clients and often get away with it. joy saw plenty of fraud in the nine years she spent working as a supervisor over drug medical. >> i believe the word got out that there was easy money to be made in the outpatient drug-free system. >> how bad is it? >> it's bad. it was real bad. i left state service about three years ago, and we would have one provider that would bill for over $1 million in one year that we believe was 100% questionable

billing. >> and that one provider was no isolated instance. over and over we found examples of fraud, not hidden fraud. this was happening in plain sight. for example, george. 19-year-old darshea miles was only 14 when she went to his rehab center along with her mother and three sisters. it's against the law to pay drug rehab clients, but that apparently didn't stop george. miles said he paid her and other clients $5 each tame thime theyd in for group counseling so he could charge medi-cal between $28 and $61 per signature. >> at first i didn't know it was illegal. i didn't know nothing -- i thought it was just a thing, you're supposed to get paid going there until people was like, george was like, don't speak out loud about the money. >> what did she do with the $5 given to her by the drug rehab center? she bought drugs.

>> we was going just to get the money to buy weed. so my whole thing was like, y'all was paying us to get high. >> the day after our interview, the state charged george and three of his employees at gb medical with grand theft in connection with more than 2,000 phony bills for rehab dating back to 2009. he's pled not guilty, but records show your tax dollars still paid him even after he was arrested and out on bail. his attorney blamed the billing practices on counselors and employees who were not well supervised. the attorney says george was a certified counselor himself who was allowed to bill medicaid. despite that, the clinic voluntarily shut down july 1st without explanation. cnn and the center for investigative reporting reviewed thousands of records in california's drug medi-cal

program, including program audits. we analyzed patient billings, even watched clinics undercover to see who was getting treatment and who wasn't. the result, we found that in the last two fiscal years, half of the nearly $186 million spent for drug medi-cal, about $94 million, went to clinics that have shown questionable billing practices or signs of fraud. case in point, the man with the cigar, a convicted felon named alexander ferdman. >> ferdman was the organizer. >> marshall vote was the lead investigate who helped prosecute ferdman back in 2000 for running a texas-based crime syndicate that staged car crashes ripping off big insurance companies. >> he listed his occupation as a -- >> driver of an ice cream truck. ferdman pled guilty to organized crime and was sentenced to seven years in a texas prison.

he served just one year, was let out early for good behavior, and ended up in california. even though felons are barred from running drug medi-cal centers ferdman soon opened a rehab clinic called able family support. taxpayer funded drug rehab has been easy money for alexander ferdman. despite his organized crime conviction in texas, his california drug medi-cal contract is now worth about $2 million a year. his salary, $180,000. even after a 2011 review by los angeles county found evidence of what it considers to be fraudulent practices at his business, ferdman was allowed to expand. drew griffin with cnn. how are you doing? i'd like to ask you some questions about your business, if i could. >> i really don't have time right now. >> you can explain how can a guy with a record like you be operating a drug rehab clinic

here in california? you've been convicted of a major insurance car crash scheme in texas. >> i was convicted, but it's not what it seems. that's first of all, and, second, whatever happened, i don't know, 15 years ago, what relevance does it have to today? >> does the county know about your criminal record? >> they probably do. i don't know. >> what happened in texas, ferdman told us, should stay in texas. >> because i was facing 99 years and i chose to, you know, pick a much smaller sentence without any of it because, you know, i could have a much worse -- but there was no fraud and there was no record of it in any way. it's a very long story. >> how could you say that? that was a huge case in austin, texas, statewide, actually. >> that's what they tried to build it, but -- and that's why they pursued it, but it wasn't what it seems and what they said it was. >> could you tell me real

quickly how you left texas and decided to come here and get into this business? how easy or hard was that? >> i don't want to talk about it right now so -- >> with such apparent widespread fraud in the program, former supervisor joy jarfers says it's not just taxpayers being cheated. >> i'm not the employee anymore that has to look at this every day, but i'm a taxpayer that knows this is going on and it angers me, and there's story after story after story about medicaid dollars being cut from people who need the services. >> well, drew and his team found more evidence of mismanagement and fraud. up next, how some clinics got clients in the door. se universi. our average class size is only 14 students. our financial tools help you make smart choices about how to pay for school. our faculty have, on average, over 16 years of field experience. we'll help you build a personal career plan. we build programs based on what employers are looking for.

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well, you just saw how the nation's largest medicaid program is riddled with fraud. well, now the state of california is cracking down because of an investigation by cnn and the center for investigative reporting. well, in part two we uncover how teens who lived in group homes were used to milk the system. investigative correspondent drew griffin continues his report. >> outside this drug rehab center in southern california, teenagers from a group home are dropped off, but according to former employees of the pomona alcohol and drug recovery center, many of the teens they

saw come here over the years didn't have substance abuse problems at all. at one-year investigation by cnn and the center for investigative reporting found that drug medi-cal program in california which costs taxpayers more than half a billion dollars over the last six fiscal years is rife with fraud and plagued with weak government oversight. victoria byers says she was driven in a van every week with other teens while living in a group home to so cal health services in riverside, california. >> we used to do drug tests and we used to sit in these classes that would teach us not to do ecstasy or not to do this drug or whatever. >> but byers, now 22 years old, thought it was strange because she didn't have a drug problem. >> i told them, why should i be here? i don't have no drug issue. i had to go because all the other girls had to go and they couldn't leave me at the house by myself.

>> we obtained these documents showing where she signed her name. that's a requirement allowing rehab centers to bill the state, and signatures meant money. the more signatures, the more the medi-cal system reimbursed the clinic. michael remembers the trips to so cal health services as well. michael, now in college, says he was also driven in a van each week with other teens from a different group home. >> you have never abused alcohol or prings drugs or illicit drugs? >> not at all. >> so all the time you spent there for three years, three years, was a waste of your time and a waste of taxpayers' money. >> yes, definitely. >> that doesn't surprise tamara, a former manager at sow cal in pomona with the same operator. she estimated 30% of the teens didn't have a drug or alcohol issue, couso counselors just ma it up.

>> it took an audit for me to know how deep it was, how deep fraud was going on there. >> other whistle-blowers came forward and claimed that so cal was committed drug medi-cal fraud by labeling teens with fake addictions. riverside county officials told us they didn't have an easy way to prove so cal was making up addictions. but the county pulled the clinic's funding anyway because so many of its clients were dropping out. that forced so cal to shut down. but the other clinic in los angeles county accused of similar practices remains open. just last year a county report on pomona alcohol and drug recovery center found significant and serious deficiencies in the program. the operator of both clinics is a man named tim agindu who told the county his business is a pillar in our community. the fraud allegations, they came from disgruntled, fired

ex-employees. tim wouldn't tell us anything. >> yes. >> drew griffin with cnn. >> and who are you? >> i just told you. i'm drew griffin with cnn. >> i don't -- >> wait a minute -- your former employees say you are billing for the county services you're not providing, sir. he soon left without talking to us. if you have nothing to hide, why are you taking off? we found case after case of rehab centers like pomona with a history of problems that still are allowed to keep billing the state. tamara is a former counselor at pride health services who claims she was told to bill for clients she didn't actually see. did you have client lists? >> i had a client list, yes. when i first got there, they gave me about 20 folders, 20 folders of clients that they had. >> did you ever account for the

20 cases that you had in your folders? >> no, i never could because -- >> you couldn't find them? >> some were in jail, one was dead. a lot -- >> wait. >> one was dead. >> and still a client of this -- >> and still listed as a client. >> she says she confronted the operator of pride. >> i told godfrey, i said, look, i don't know how you want me to bill for clients i don't see or have, and he basically in a nutshell told me how do you think these lights are going to get paid? >> she says he then fired her. >> would you describe what you've been through as anything more than just throwing away taxpayers' money? >> it is -- yeah, just throwing away taxpayers' money. >> that was in 2009. regulators have found severe deficiencies at pride health services from 2005 to 2011, including evidence of ghost clients. two years ago the county

uncovered what appeared to be fraudulent documentation used for billing. a state auditor urged pride be shut down. not only did pride stay open, it got even more medi-cal money, more than $1 million in a year. in its most recent investigation brought on by yet another employee accusing pride of billing for ghost clients, county investigators found the allegations unsubstantiated. they couldn't prove it, but they did find the operation extremely troubling discovering missing paperwork, signed and dated medical waivers with no client information, and missing treatment plans. despite that poor review, pride is staying open. if the county investigators couldn't find evidence of ghost patients, maybe they should do what we did, go there on a wednesday when they are closed for treatment but apparently

still billing. we saw no one entering the center on wednesdays. >> we're going to go in. >> so we went in ourselves with hidden cameras. >> do you have rehab going on today? >> mondays, tuesday, and thursday and fris. >> mons, tuesday, thursdays and fridays. not wednesdays? >> there's no group on wednesday. today is wednesday. there's no group today? >> no. >> even though it's closed for rehab, pride has been billing for clients on wednesdays as these records show. including 60 on the day we went in with hidden cameras and found no clients there. as for tim, he told the county two years ago that pride accepted responsibility for deficiencies. we went looking for him seen in this police mug shot for an unrelated arrest in 2003. hi, drew griffin with cnn. how are you doing? >> hi, how are you doing? >> is godfrey in? >> give me just a second.

>> okay. >> godfrey? he's actually not here at the moment. >> pride counselor markita jones denied any wrongdoing. we wanted to ask about an investigation we're doing, about ghost patients, people signing names, faking signatures and billing the state and the county for treatment that's not happening. do you know anything about that? >> no, i don't, because that's not going on at this us a. >> godfrey has never asked you to sign a form that says all these patients came here and they didn't come here? >> no, sir, did he not. >> you do the counseling yourself? >> yes, i do. and i actually see live clients. >> as we waited for godfrey to show up, employees inside called police. they told us the boss was coming. we've been camped out waiting for them to show up. then abruptly shut down for the day. did he call back and say he's not coming? we never heard from anyone at pride health services again.

>> so what's the state's reaction to all of this? you're about to see what happened when drew griffin tried to find out. ime. these chevys are moving fast. i'll take that malibu. yeah excuse me, the equinox in atlantis blue is mine! i was here first, it's mine. i called about that one, it's mine. mine! mine. it's mine. it's mine. mine. mine. mine. mine. it's mine! no it's not, it's mine! better get going, it's chevy model year-end event. for them to show up. to find out. the chevy model year-end event. the 13s are going fast, time to get yours. current chevy truck owners can trade up to this chevy silverado all-star edition with a total value of $9,000. of course i had no idea what it was. i felt like my feet were going to sleep. it progressed from there to burning... to like 1,000 bees that were just stinging my feet. [ female announcer ] it's known that diabetes damages nerves. lyrica is fda approved to treat diabetic nerve pain. lyrica is not for everyone. it may cause serious allergic reactions or suicidal thoughts or actions. tell your doctor right away if you have these,

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welcome back. well, moments ago we showed you how taxpayers are being ripped off by some rehab clinics. it took weeks for drew griffin to get an interview with officials. they finally did sit down with us, and now there's a major crackdown on fraud in the state, but watch what had to happen first. >> george aluno shouldn't even be in california's drug rehab business. you seem to be at the center of fraud allegations here. >> no. >> he's been banned from billing medicaid since 2002 but it hasn't stopped him from billing the state of california. tim is accused of fraudulent practices at his drug rehab clinic but it hasn't stopped him from billing the state of california either. >> drew griffin with cnn. >> and who are you? >> i just told you. i'm drew griffin with cnn. >> i don't -- >> wait a minute. your former employees say you're

billing for the koun county ser you're not providing. and then there's alexander ferdman. he came to california, setting up a drug rehab clinic, and billing taxpayers even though felons are barred from running drug medi-cal centers. mr. ferdman, how can a guy with a record like you being operating a drug rehab clinic here in california. you have been convicted of a major insurance car crash scheme in texas. >> i was convicted, but it's not what it seems. >> in the last two fiscal years, taxpayers spent nearly $186 million supposedly treating alcohol and drug abuse patients in california. our investigation with the center for investigative reporting found half of that money or about $94 million has gone to clinics that have shown questionable billing practices or signs of fraud.

joy jarfers, former drug medi-cal supervisor, says she complained to the state about all the obvious fraud. >> we found billing records for people in jail, one person dead, people who said they didn't need this kind of treatment. >> uh-huh. >> clinics closed on a certain day billing for that certain day. >> uh-huh. >> none of this surprises you. >> not at all. we found all of those things. >> for more than a month now, cnn has been asking for an explanation from the state of california, and for more than a month we've gotten nowhere. >> i believe the on camera interview was declined. >> can i just ask you from you why? >> that wasn't my decision. >> state health officials in one sacramento building after another refused to be questioned, including toby douglas, who oversees drug

medi-cal. will you make sure to provide a response as to why this widespread fraud is allowed to continue? finally after weeks of calling the state's secretary of health and human services, diana dooley, and getting no for an answer, we decided to ask for a response in person. secretary dooley? >> yes. >> drew griffin with cnn. >> how do you do? >> we've been trying to reach you and talk to you about the widespread fraud that's in the medi-cal drug rehab business but we're told neither you nor the program director nor anybody at the state of california will talk to us about it. in an uncomfortable moment, the secretary at first refused to speak. secretary? do you know alex ferdman, a convicted felon who apparently runs one of these clinics and has been billing the state of california for several years? despite the fact that there have been complaints registered with the department about him? he's convicted of a major insurance fraud in the state of

texas but for somehow was able to get certified and has been billing. i'm just wondering if there's anybody in the state of california that's concerned about this fraud? then finally answered a question. >> the state of california takes fraud very seriously and there are many investigations that are under way. the allegations, all allegations are given full and fair consideration and you have caught me running because i am late for a meeting that i'm chairing. >> i wonder if you would just do one thing and maybe ask toby douglas to sit down and talk to us and explain to us some of the questions we have -- >> if you want to give us a little bit of time -- >> we've been giving you about 12 months. >> we have a budget we are just completing and we have many priorities on our time. information has been provided, answers have been provided. we have a very -- >> i understand. >> we have a very extensive fraud and investigation unit in medi-cal that's one of the best

in the country. >> let me ask you two quick questions. >> that's all i have to say. >> are you concerned there is massive fraud? because that's what we're finding out, and, number two, as secretary of health, could you have toby douglas just sit down and talk to us about our specific questions? >> excuse me. >> but that is hardly the end of the story. >> would you get security for me, please. >> our confrontational exchange with california's secretary of health and human services may, in fact, have been the trigger for a major statewide crackdown. one month later, nearly to the day, the state sent out this news release. 16 drug medi-cal centers are under investigation and temporarily suspended. just this week california announced that figure has now jumped to 29 rehab centers. and last week california relented to cnn's interview request. chief deputy director of health care services, karen johnson, tried to explain why it has

taken so long. >> we are going to review all of the drug medi-cal providers in the state of california. we are also going to require that they re-enroll in our program so that they become recertified. >> based on that answer, i think it's fair to say that the oversight by the state of california up until now has been seriously lacking. agree? >> i would say that's not a fair characterization. any complaints that were referred to the department of justice and to the department of health care services was investigated. there are other complaints. those complaints were investigated. that is going to be part of the ongoing, active investigation, and as i mentioned, we are looking at all of the cases and what's emerging is a much larger, bigger picture that we need to address. >> bigger picture of fraud.

>> bigger picture of problems. >> and only now two weeks before these two national news organizations are about to release a major study of what we found was extensive fraud is the state of california doing this extensive review. coincidence? >> it's not a fair characterization. we've been investigating all along. >> my question is why has it taken the state so long to catch up to this? >> look, there are bad people who want to scam this program, and we are going to do everything possible to investigate and deploy the necessary resources to improve and enhance our enforcement effort. >> so you feel the state of california has done enough. >> obviously what has happened and what we see, clearly there's more that needs to be done. >> yesterday the state of

california temporarily suspended 46 clinics with 62 satellite counseling sites and after this series aired, state officials now say they are putting all necessary resources to fight fraud in the program. drew griffin with that report. i'm anna coren. anthony bourdain: parts unknown is next. [ male announcer ] you'll never see weekday lunch the same again!

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